Filings for U.S. unemployment benefits increased by more than expected to a seven-week high, a possible sign of strains in the labor market that could factor in to the Federal Reserve’s debate over whether to cut interest rates next month.
Jobless claims rose by 10,000 to 227,000 in the week ended June 22, according to Labor Department figures released Thursday that exceeded all estimates in Bloomberg’s survey of economists.
Economists polled by Reuters had forecast claims rising to 220,000 in the latest week. The Labor Department said claims for California and Mississippi were estimated.
The four-week average, a less-volatile measure, increased to 221,250, the highest in more than a month.
Data for the prior week was revised to show 1,000 more applications received than previously reported.
Claims could rise further in the coming weeks as auto manufacturers temporarily shut down assembly plants for summer retooling. Companies implement the plant closures at different times, which can throw off the model the government uses to remove seasonal fluctuations from the data.
Claims are being watched for signs of a rise in layoffs stemming from a recent escalation in trade tensions between the United States and China. Rising risks to economic growth from the trade war, and low inflation, resulted in the Federal Reserve last week signaling interest rate cuts as early as July.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,250 to 221,250 last week.
Despite the underlying strength in the labor market, the broader economy is slowing. Manufacturing is struggling, the trade deficit is widening again, consumer confidence is ebbing and the housing sector remains mired in a soft patch.
The Atlanta Fed is forecasting gross domestic product growth to rise at a 1.9% annualized rate in the April-June quarter. The economy grew at a 3.1% pace in the first quarter following a temporary boost from exports and an accumulation of inventory.
Thursday's claims report also showed the number of people receiving benefits after an initial week of aid increased 22,000 to 1.69 million for the week ended June 15. The four-week moving average of the so-called continuing claims gained 6,500 to 1.69 million.
The continuing claims data covered the week of the household survey, from which June's unemployment rate will be calculated. The four-week average of claims rose 13,000 between the May and June survey weeks, suggesting little change in the unemployment rate, which is hovering near a 50-year low of 3.6%.
Material from Bloomberg and Reuters has been used in this report.
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